Defence Minister suddenly resigns

The Baltic Times, TALLINN
By Kairi Kurm
Sept 28, 2005

Defense Minister Jaak Joeruut resigned on Sept. 26 in response to scandalous anticommunist T-shirts worn by the director of Estonia’s war museum at a soccer game.
Joeruut, a member of the Reform Party, also hoped this move would signal his protest against corruption allegations in political and business circles that have so far been left unanswered.

The minister wrote in his resignation letter that he did not have the strength to work in a government due to the anger, vulgarity and unanswered accusations of corruption.

Indrek Tarand, manager of the Laidoner Museum, appeared with others in public in a red T-shirt with the words Kommarid ahju! (“Commies to the oven”) at a soccer match held between Estonian National TV and Estonian Radio on Sept. 23.

Tarand was not available for comment.

Juku-Kalle Raid, chief editor of KesKus and the individual who made these shirts, told The Baltic Times that the incident was just an excuse for the defense minister to do what he would have done sooner or later — distance himself from the “bad lot.”

Raid believes that Tarand wanted to show that he did not tolerate the “red nomenclature.”

“Commies to the oven” is the right translation, said Raid. The translation offered by Baltic News Service – “burn the commies” – is too violent, he said.

Raid’s paper, KesKus, is known for its black humor.

The shirt bore the names of former Communist Party members, including heads of the current coalition parties and the president of Estonia. Joeruut was also listed.

Joeruut and Tarand know each other well. The museum Tarand manages is run under the auspices of the Defense Ministry.

“This picture stunned me,” said Joeruut, referring to the photo of Tarand he saw in a tabloid SLOhtuleht. He said that Estonia was a democratic country, and its management and institutions had been elected in a democratic way. It would be normal to elect somebody else if the current management did not satisfy, he said.

Police are investigating the case — in particular, who made the shirts and what the point of the shirts was.

In Raid’s words, “[Economy Minister Edgar] Savisaar started the criminal case. So far it has been okayed with police. They even asked me if they could buy a shirt for investigation. I went and took it to them myself.”

He added, “A police representative said on the air that interpreting ‘commies’ could turn out to be problematic. Besides, none of the names bare big letters. I have a decent crew of lawyers behind me. I do not see why I should be afraid of the police of my own country.”

Raid said T-shirts have been part of pop-culture in Europe, and he did not know of any such precedents that had been taken so seriously. He admitted he expected a reaction from society, but not such a strong one.

He is certain that Joeruut’s main concern was not the T-shirt but the charges of corruption. Raid told The Baltic Times that the current situation in Estonia resembled the Soviet one of 25 years ago.

Prime Minister Andrus Ansip, a Reformist, has four weeks to accept or turn down the application, but he promised to make a decision sooner. His initial response was that Joeruut’s move was not well thought out.

Joeruut, however, was unequivocal. “I didn’t make this statement as a chess move and I do wish to resign,” he told a news conference.

Meanwhile, Savisaar, who is chief of the Center Party, suggested that the heads of all parties involved in the “shameful episode” should step down. He also called on parties to kick out all members who were part of the incident, and wondered openly why none of Res Publica’s former communists were mentioned on the shirts.

If he were to put all the names on the shirt, Savisaar said, he would need two meters of material. The MP added that he took the first ones he found on the Internet. At the end of the list it says “etc.,” he stressed.

Raid does not exclude that a “volume 2” shirt could appear in the future. Incidentally, Raid is listed on Res Publica’s list in the forthcoming municipal elections, though he is not member of the party.

Raid’s colleague is running on the Pro Patria ticket. He also tried to sell shirts at the event, but organizers stopped him.

“The shirt was our fabrication, and the coalition parties have nothing to do with it. Savisaar has always been paranoid,” said Raid.

Res Publica, a right-wing opposition party, said the scandal had no connections with the party and was organized by KesKus. Siim Mannik, party spokesman, said that even if party leaders wanted to, it was too late to exclude Raid from the list.

Mannik added that the radicals who came up with the slogan “commies to the oven” were pointing out the right thing but went too far with their choice of words.

“We have to admit that Soviet thinking is indeed more strongly established in Estonia, and Res Publica, in any case, objects to the system where we have to be thankful to some politicians, fellowships or parties for a better position or a higher pension,” explained Mannik.

“Politics based on back-scratching, where people do each other favors, has less common points with the democratic development of the country and inevitably leads to the deterioration of Estonia,” he said.

Res Publica has called for a meeting with coalition parties to discuss open government. In Res Publica’s opinion, the wrong minister resigned.

In his resignation letter, Joeruut also criticized the Center Party for good relations with Russia and the People’s Union, the third coalition party, for bringing in foreign observers to monitor Estonian elections. In his opinion, it shows distrust for one’s own country.

Some observers have accused the minister of playing pre-election games. Joeruut is considered to be a good candidate for next year’s presidential elections.

Sociologist Juhan Kivirahk wrote in a daily Eesti Paevaleht that after the resignation, Joeruut has a good position to start a presidential election campaign. The society is waiting for a moral purification and a positive hero.

Millionth passenger passes through Tallinn Airport

The Baltic Times, TALLINN
By Kairi Kurm
Sept 28, 2005

On Sept. 2, for the first time in its history, Tallinn Airport passed the million–passenger milestone during a calendar year, with airport officials promising to boost investments and lower passenger fees.
By contrast, Riga International Airport marked its 1 millionth passenger in August, but as Tallinn Airport officials pointed out, Latvia has a population of 2.3 million while Estonia’s is 1.4 million.

Airport executives are predicting that total turnover will amount to 1.4 million passengers this year, a 40 percent increase year-on-year and a sharp contrast to the 605,000 that shuffled through the airport doors in 2002.

To meet the increased demand, the airport is planning to invest 860 million kroons (55 million euros) over the next three years. Most of the financing will come from the EU cohesion fund.

Rein Loik, airport chairman, said that the passenger terminal would be expanded by 18 meters on each end, and a new 200-meter-long corridor with nine gates would be added. Currently there are only five gates at the airport. In addition, the departure lounge will be divided in half, with one serving EU-bound flights and the second all other destinations.

“Estonia is planning to join the Schengen area by 2007, and we must be ready,” he said.

Passport control will be conducted only at non-Schengen areas, whereas local flights will have a security control.

A modern drainage and cleaning system will be built, the terminal’s de-icing system will be improved, and the taxiing area will be extended, making air traffic safer and more environmentally–friendly. This will enable the airport to increase the number of flights and shorten intervals between them, Loik explained.

What’s more, the airport is planning to lower fees despite the investments. Loik said that the fee would not be raised from the present 155 kroons per passenger, saying that this was an average fee in comparison with other European airports.

The last time the airport changed the size of fees was in November last year, when fees for all flights were reduced to 155 kroons regardless of the time of day.

Regarding new airlines, Loik couldn’t say if any would start flying to the Estonian capital in the near future, though he admitted there was interest.

Currently, Tallinn Airport has regular flight connections with 21 European cities and two Estonian islands with 13 airlines. The biggest flight companies this year were Estonian Air (46 percent), Easyjet (13 percent), Aero Airlines (11 percent), CSA Czech Airlines, Lufthansa, Air Baltic and LOT.

The most popular destinations were London (14 percent), Helsinki (13 percent), Stockholm (11 percent) and Copenhagen (10 percent).

Piret Kallas from Enterprise Estonia said that, although Easyjet started flights last year in November, a slow season, the interest among British tourists was high. “British tourists come for a city tour, which is less seasonal, while German tourists coming with Easyjet’s Berlin route prefer to tour around all the Baltic countries. British tourists include a number of bachelors as well,” he said.

According to 2003 statistics, only 5 percent of people travel to Estonia by air. Sixty percent of passengers arrived and left by liner, 5 percent by cruise ships, 28 percent by land and 1 percent by train. Some 6.7 million passengers passed through Tallinn Port last year.

“The number of passengers coming through the port and harbor has increased quite a lot, but the share has not changed much,” said Kallas.

The number of passengers, especially business passengers, increased tremendously when Estonia became an EU member, said Loik. A drop in ticket prices has also influenced the increase. Two discount airlines, Easyjet and Fly Nordic, have brought along a new profile of customers, who would otherwise not travel.

Hanschmidt’s case raises contrary feelings

Ain Hanschmidt

The Baltic Times, TALLINN
By Kairi Kurm
Sept 21, 2005

Recent polls conducted among opinion leaders and society show that there are contrary views of former banker Ain Hanschmidt’s suspicious deal in acquiring ownership in passenger ferry operator Tallink. Three out of four people questioned by the Baltic News Service and Faktum condemn the deal.

Ain Hanschmidt, who led Estonia’s second largest bank SEB Eesti Uhispank since its establishment in 1992, took up a management position in Tallink in August this year and received a large stake in a firm that controls part of Tallink. Neither Hanschmidt nor Enn Pant, former head of Tallink, have explained how it was possible to acquire a stake worth about 45 million euros for only 10,600 euros.

Faktum sociologist Juhan Kivirahk said that such incidents arouse public opinion. According to their research, 73 percent of the 405 polled condemn the deal, 3 percent believe it’s fine to use business networks for personal interest, 15 percent are indifferent and 9 percent have no opinion on the matter.

A total of two-thirds of the respondents were aware of the Hanschmidt deal (84 percent of Estonian speaking and only 22 percent of Russian speaking respondents).

The deal would have been “fine for the days when people had a much more Soviet kind of thinking,” said Joakim Helenius, chairman of Trigon Capital investment services company. “But they are all to be equally condemned now. Individuals are starting to realize that what was done in the ‘90s was wrong and unacceptable.”

“It would appear that, technically, he did not break any laws, but it is very obvious that it was ethically wrong,” he added. “A banker, like politicians, is in a position of trust, and it is very easy to abuse a position of power, especially when loan decisions are made. One way of bribing is to offer people with influence attractive deals. The deal offered to Hanschmidt, to buy shares in a holding company, is not what I call market terms.”

But Helenius, who has Finnish roots, stressed, “The fact is that Estonia has made much progress in overcoming the corruptive attitude that is still so common in many East European countries.”

Other analysts seemed to agree.

“There is nothing that special about this deal,” said Lauri Lind, head of the stock markets department at Hansapank. “Many things happened between 1995 and 1998 that are not contrary to the legislation. The question is about ethics.”

According to Livia Kulm, spokeswoman for the Financial Supervision Authority, Hanschmidt has not been reachable for further questioning. Thus, a final statement might take weeks to accomplish.

Skandinaviska Enskilda Banken, the owner of SEB Eesti Uhispank, announced last week that, according to their internal audit, Hanschmidt did not extend any favorable loan conditions to Tallink. What’s more, the bank did not know of Hanschmidt’s interest in Tallink’s owner.

Juri Mois, former head of Estonia’s largest bank Hansapank, said that hiding involvement in companies was typical business practice in those days. Mois was a member of Parliament and the Tallinn city mayor for some time, and is currently involved in his own transit business.

“I have lived my life according to market terms. It enables me to avoid nonsense,” he told The Baltic Times. “ When Hansapank lent money to Norma (a seat-belt producer), and Hansapank employees bought Norma’s stocks, we never caused any problems. But currently, there is suspicion that the price paid for the shares was different from that of the market price.”

He said that if former Tallinn mayor Edgar Savisaar could buy a nice summer cottage at market price, then it should be acceptable that shares were bought for under market price.

“If society accepts the mayor’s deal, both should be handled equally,” he added. “Besides, Hanschmidt’s deal was done earlier when such things were more acceptable.”

Mois said he admires Hanschmidt for supporting Tallink’s forerunner, Hansatee, which was not transparent enough to safely receive a loan from Hansapank in those days.

European Commission Vice President Siim Kallas, who was the former prime minister and president of the central bank, told BNS that Hanschmidt’s case was a question of ethics and internal rules of the private sector. This, he emphasized, had to be treated in the light of other major business scandals such as Enron or Parmalat.

The difference between countries is not with corruption itself, but how cases involving corruption are handled, he said.

According to some speculation, Tallink’s shares will be quoted on the Helsinki Stock Exchange later this year. The price of a Tallink share is already 70 kroons (4.5 euros) when purchased through Hansapank.

Rain Tamm, partner with investment bank LHV, said that a fair price could be between 65 – 75 kroons per share, and the market value of the company could be between 460 million – 530 million euros.

“The price is not high if there is an optimistic forecast and good profit growth,” said Lauri Lind.

Lind believes that Hanschmidt’s case will have no impact on the stock offering since it has not influenced the company’s core business.

Best enterprises in Estonia are Regio and Hansapank

Today, in the evening of 20 September the entrepreneurship prize winners were announced festively in the Estonia Concert Hall. The “Entrepreneurship Award 2005” granted by Enterprise Estonia was given to Regio and Hansapank was declared the most competitive enterprise in the “Most Competitive Estonian Companies Ranking 2005.”

In addition to the two main prizes the winners in five prize categories were announced in the competitions held in the framework of a joint project of Enterprise Estonia, the Estonian Chamber of Commerce and Industry, Estonian Employers Confederation and the Eesti Päevaleht daily newspaper and the most competitive enterprises were determined by areas of activity in 11 categories.

According to Alar Kolk, the Chairman of the Board of Enterprise Estonia, the winner of the “Entrepreneurship Award 2005,” AS Regio, was unanimously selected by a representative jury. He said that Regio is a good example of an innovative Estonian enterprise that is able to compete successfully with its high-technology products in the external market. Regio, the company that also exports its products to India and Saudi Arabia, was also announced the winner of the “Innovator 2005” prize category.

The winner of the “Exporter 2005” category prize granted by Enterprise Estonia was AS Polimoon. The enterprise located in Rõngu produces plastic details and its clients include Volvo and Saab. The export turnover of the enterprise was 91 million kroons in 2004, having increased 142% in a year.

The winner in the “Tourism Innovator 2005” category was Estravel. The total turnover of the enterprise was 613 million kroons in 2004, including the turnover of 81 million kroons from servicing incoming tourists.

The “Foreign Investor 2005” prize was given to Elcoteq Tallinn. The enterprise that produces telephones and electronic components mostly for Nokia and Ericsson invested nearly 360 million kroons in the expansion of its activities and it employs almost 3700 people.

The winner of the “Regional Promoter 2005” prize was Pühajärve Puhkekodu, which plays an important role in the development of the Otepää region. The enterprise employs 105 people in the southern Estonia, and its return on sales was close to 32 million kroons in 2004.

The aim of compiling the competitiveness ranking is to give entrepreneurs a possibility to compare themselves with other similar enterprises and to assess their success, cost-effectiveness and sustainability. The competitiveness ranking is compiled as a general ranking and by areas of activity in 11 categories in a percentage comparison with the first ones in the ranking.

Siim Raie, the Director-General of the Chamber of Commerce, said: “Competitiveness is an indicator that shows the long-term ability of the enterprise to generate profit and its ability to maintain and increase its market share. This is exactly why both healthy and strong enterprises and still developing enterprises should take measure of each other.”

By areas of activity the following enterprises were announced the most competitive enterprises:
AS Tallinna Kaubamaja – the most competitive retailer
AS Silberauto (as a group of companies) – the most competitive wholesaler
BLRT Grupp AS – the most competitive industrial and energy enterprise
AS A.Le Coq Tartu Õlletehas – the most competitive food industry enterprise
AS Merko Ehitus (as a group of companies) – the most competitive construction enterprise
AS EMT – the most competitive communication, transport and logistics enterprise
AS Ekseko – the most competitive agricultural and forest management enterprise
Delegatsioon OÜ – the most competitive hotel and restaurant enterprise
Kodumajagrupi AS – the most competitive business service and real property enterprise
AS Hansapank (as a group of companies) – the most competitive financial intermediation enterprise
AS Kuusakoski – the most competitive service enterprise and “The most competitive enterprise 2005” – AS Hansapank (as a group of companies).

Altogether 586 enterprises took part in the “Most Competitive Estonian Companies Ranking 2005” competition. Participation was voluntary. Almost one- third of the enterprises (173) were industrial and energy enterprises. The least active participants in the ranking were communication enterprises the number of which was 7; therefore, the assessment method allowed the organisers of the competition to include communication, transport and logistics enterprises into one area of activity.

The complete Most Competitive Estonian Companies Ranking can be found at:

The aim of carrying out the “Entrepreneurship Award” competition is to give state recognition to successful enterprises in Estonia and to increase the entrepreneurship awareness. The patron of the competition that was held for the fifth time is the President of the Republic of Estonia, Arnold Rüütel.

Source: Enterprise Estonia

PM: Estonia must set clear goals

To achieve maximum gain, Estonia must set clear priorities for research and development between 2007 and 2013 and adopt measures to attract educated scientists to the country.

“The fact that we’re attractive to investors is not going to be enough in the future,” said Prime Minister Andrus Ansip during the closing session of the Enterprise Estonia (EAS) innovation forum ‘Estonia at the Crossroads.’ “Estonia has to become a magnet, drawing in people with innovative ideas – ideas that can be implemented here.”

In order to achieve this, Estonia must set clear priorities for research and development to focus on. Prime Minister Ansip added that in his view energy and medicine should also be part of this group.

“Our energy resources are diminishing and becoming more expensive. We can only hope for success in using them economically,” he explained. “Aging is a global problem. If we contribute to biomedicine and medicine, we can be sure that with good work we will be successful.”

According to the Prime Minister, prioritising fields does not simply mean greater financing, but contributing more to their infrastructure, doctorate studies and increasing the number of university students studying such subjects.

“In five years’ time we’ll be in a demographic position leaving us with significantly fewer university students than there currently are,” he added. “We have to open our universities up much more than we have been to students from neighbouring regions, and bring in teaching staff if necessary. If we can attract enough doctors to universities that they start heading into economics and business, we’ll have much more reason to expect that Estonia will become a bigger magnet for innovative ideas than it is at the moment.”

“A lot will be determined in 2006 about the shape of the Estonian economy and research and development over the next ten years, the latter of which the European Union has agreed to finance between 2007 and 2013 with tens of billions of kroons,” said Enterprise Estonia chairman Alar Kolk. “The forum has initiated a debate about how that money should be used.”

”The fact that Estonia is lower on costs than Finland or Sweden brings short-term benefits, but in the long run it will do more harm than good,” said renowned innovation expert, Sussex University Professor Nick von Tunzelmann. “Estonia must put its brains potential to use in all fields, since to this point it is probably the country’s biggest natural resource.” According to von Tunzelmann, Estonia should be putting more into high technology – information, bio- and nanotechnology – and in other branches of the economy and spheres of life than is currently the case.

Top experts in innovation from seven countries took part in the EAS forum, which was held in the Tallinn TV Tower conference centre on Thursday and Friday, presenting an overview of the systems in their countries and offering advice to Estonia’s policy shapers and scientific and business leaders on the formation of national science, technology and innovation policy.

All presentations from the forum are available at
Source: Enterprise Estonia

Government approved the first draft of the Euro Adoption Plan

Today, on 1st of September, the Government of Estonia approved the first draft of the euro adoption plan, which will be the basis for making preparations for the changeover to the single currency. The adoption plan was prepared in cooperation of Ministry of Finance, Eesti Pank, and several other state authorities. In addition, credit institutions, the Consumer Protection Board, and organisations representing the business community were consulted.
Aivar Sõerd, Minister of Finance, said euro will be adopted according to the plan in account money, accounting, and contractual relationships as from the midnight of January 1, 2007. Sõerd added that from that moment on it is possible to use both euros and kroons in cash payments for two weeks.
Euro cash will be put in circulation and kroons will be withdrawn via bank offices, cash dispensers, and retailers. According to Andres Lipstok, Governor of Eesti Pank, the smooth changeover will be ensured by credit institutions exchanging kroons for euros for at least 6 months as of the adoption day, using the central parity and charging no service fees. Lipstok added that after that, Eesti Pank will continue to exchange kroons for euros at the central parity and without service charges for an unlimited period of time.
In order to give people some time to get accustomed to the euro as the new currency unit, and to avoid potential misunderstanding caused by changes in the numerical value of the prices, the state obliges the retailers to display the prices in both kroons and euros for six months before and after the launch of the euro cash.
Minister of Finance expressed the government’s wish to reduce upward price pressures, so the state is going to set an example for merchants by rounding the taxes and state fees downwards for the benefit of the taxpayers when converting them from kroons into euros. The price level before and after the changeover will be regularly monitored under the supervision of Ministry of Economic Affairs and Communications, and the resulting price comparisons will be made public.
The precondition for Estonia to adopt the euro on January 1, 2007 is meeting all the economic and legal requirements established for the countries wishing to join the euro area. The surge in oil prices in the world market has put a strain on meeting the inflation criterion. Currently Estonia is conducting negotiations with the European Commission regarding the harmonisation of Estonia’s legislation.
To ensure Estonia’s readiness for the changeover on January 1, 2007, the adoption plan will be further specified and supplemented in cooperation with all the parties involved.
From now on, Minister of Finance will present the Cabinet with quarterly reports on euro preparations.
The euro adoption plan is available on the web pages of Ministry of Finace (, in Estonian only) and Eesti Pank.

Source: Ministry of Finance